By the time Brian Gragnolati joined Atlantic Health System as president and CEO in 2015, it was increasingly evident to him that while there was a strong board, changes to the system's governance model were necessary due to its growth.
The Morristown, N.J.-based system started as a teaching hospital. Over the years, mergers and acquisitions have helped create what is now a seven-hospital system with numerous outpatient centers and more than 20,000 employees.
Last year, approximately 1.2 million people were touched in some way through Atlantic's network. About half of those are in some type of risk arrangement with the organization, through the Medicare Shared Savings Program, direct collaborations with commercial insurers, or through the Healthcare Transformation Consortium, a self-insured body of employers that Atlantic formed with other organizations.
In a conversation with Becker's, Mr. Gragnolati emphasized the need for identifying essential board competencies to navigate the system's growth. He described Atlantic's shift from a traditional representative governance board to a competency-based structure.
A study published in 2023 found that fewer than 15% of board members overseeing the nation's top hospitals have a background in healthcare. Mr. Gragnolati noted that throughout his career, he has seen organizations consider how they could bring in individuals with specific knowledge to address industry challenges.
However, "very few organizations formalize that," he said. "So when I sat down with our board leadership when I first got here and started talking through how we could approach this from a governance standpoint, I really started to socialize that [idea] and found a very receptive group of board members that really wanted to think differently."
Atlantic already had term limits for board members, but Mr. Gragnolati realized there needed to be modifications related to those, as well as other changes.
As part of the initial process, Atlantic conducted board education about topics of governance using outside experts and looked at the size of its board. The board had evolved through acquisitions, and the health system wanted to mitigate the risk of creating an overly large board.
Identifying competencies
Once the governance committee started considering these elements, Atlantic worked to identify the competencies it needed and determine if they were already present. If not, the health system wanted to find ways to bring in people with that expertise.
"The first question I get asked is, 'How do you identify the competencies you need?'" Mr. Gragnolati said. "That's really driven by what you need in terms of governance and voices."
Atlantic created a list of essential competencies, such as advocacy and government relations at the federal and state levels, clinical expertise related to the business of medicine, community connections and outreach, knowledge of construction and real estate, financial expertise, governance expertise, knowledge of health insurance payment and risk contracting, and knowledge of the workforce and human resources.
The health system then prioritized the competencies in terms of importance in the foreseeable future.
To determine which board members have the required expertise, Atlantic decided not to rely on self-assessments. Rather, Mr. Gragnolati and the general counsel evaluated the board members' attributes. They presented findings to the governance committee first and then to the full board for their reactions.
The evaluations "were pretty close. There were a few changes, which were fine. This is not precision, this is just direction," he said.
"You know what competencies you're looking for. You now know what you've got. Now the next question is, 'When you have opportunities for recruitment, how do you work with the governance committee to prioritize them?' And that is driven, in part, by your strategic plan and where you think the pressures are coming that you need these voices of governance at this level."
Regarding term limits, Atlantic directed its governance committee chair to conduct annual conversations with each board member to discuss their desire to continue serving and to provide feedback. Then, at the end of each three-year term, there is a formal review to decide if the board member should continue.
"When you have great board members, that [process is] easy," Mr. Gragnolati said. "And you usually see more of the opt out for personal reasons or other reasons."
Historically, a number of systems have approached friends and family to fill vacant board positions. Atlantic instead uses a search consultant to recruit for uncompensated board seats.
"The results were amazing. We got a great pool of candidates from across a broad geographic area," Mr. Gragnolati said. "And we were able to go through the interview process with them at the governance level and select really strong candidates."
Atlantic's board currently comprises about 15 members, with approximately five having been selected through a search process, an approach Atlantic plans to continue using.
How is it working?
Mr. Gragnolati is often asked about the results of the competency-based board structure.
He pointed to a board meeting last month that he said exemplified the engagement of its members. The board was discussing growth and population health strategy.
A question arose about a variation related to the MSSP program, and a board member known for being an architect of the Affordable Care Act was able to discuss that publicly with a medical officer who heads up one of Atlantic's ACOs.
To me, "this is what a competency-based board is all about," Mr. Gragnolati said. "To have that conversation in a lot of board rooms [under a traditional structure] would be just management talking to folks [for whom] the topic may not be center of mind, as volunteer board members."
His recommendations for other healthcare leaders seeking a competency-based structure:
- Ask, "Why not?"
- Engage in a deliberate education process with the board.
- Make sure a strong governance committee is in place.
- Use a recruiter to find board members.